A Very Disruptive Year
The best word to describe what was happening in the retail grocery industry in 2017 may be “disruptive.” There was disruption in the political arena, to be sure. Grocers are grateful to have seen debit reform saved and hopeful for proposed federal tax reform now that Republicans have control of the U.S. Senate, the House of Representatives and the presidency.
In the Midwest, the year marked the last for some operators. Gordy’s Market, Marsh Supermarkets and Central Grocers all went bankrupt this year. Strong regional grocers came in to take over stores in Wisconsin and Indiana. Other wholesalers are taking up the slack in Illinois.
Executives moved about, and while expected in every year, it seemed there were more retirements than we’d seen in recent years. In several cases, those who took their places were loyal, longtime employees.
Technology continues to be a major disruptor, with retailers finding more ways to use it to make operations run more smoothly and give their customers the services they demand.
1. IGA Chairman, President and CEO Mark Batenic stepped down from his roles as president and CEO in mid-October. He will remain chairman of the IGA board until his retirement on Dec. 31, 2018, and then transition to non-executive chairman in January 2019.
Batenic is succeeded by John Ross, president of Inmar Promotion Network. As president and CEO of IGA Inc., Ross assumes responsibility for domestic and global operations for IGA, an independent supermarket network with nearly 5,000 IGA supermarkets in more than 30 countries worldwide, representing $36 billion per year in sales. Ross said the new job feels like one he has been preparing for his entire life. His grandfather owned an independent grocery store in West Virginia, and he worked retail from the age of 16 on. His experience includes operations, merchandising and marketing for independent, regional, national and international chains.
2. Meijer President Rick Keyes added the title of CEO on Jan. 1. Hank Meijer now serves as executive chairman of the Meijer board. It is a major change for the privately owned and family-operated chain based in Grand Rapids, Michigan. The role of Meijer president had been held by a non-family member, but the CEO role belonged to Fred Meijer and then Hank Meijer, respectively.
We’ll get back to what else Hank Meijer is doing when we look at politics.
3. Doug Cygan, who spent his entire career with Jewel-Osco, replaced Mike Withers as president of the Albertsons division this year. Withers moved on to lead Albertsons Cos.’ East region operations. Cygan previously was VP of marketing and merchandising. His career began at Jewel-Osco in April 1980 as a part-time clerk. He now leads the company’s 186 Jewel-Osco stores in Illinois, Indiana and Iowa. Jewel-Osco stores have received significant upgrades in the Chicago market, and Jewel also added a mascot this year, JoJo.
4. Jayne Homco, who began her Kroger career in 1975 as a store clerk in Kroger’s Central division in Indianapolis, retired as president of Kroger’s Michigan division Sept. 30. Homco was succeeded by Scott Hays, formerly VP of operations for the company’s Fry’s division in Arizona and previously a longtime Albertsons employee.
Paul Bowen, who was president of Kroger’s Jay C and Ruler Foods division, retired after 46 years of service, effective June 21. Former Aldi executive Liz Ferneding took over as Ruler Foods president on July 31.
5. Cub Foods President Eric Hymas, who had served in the role since January 2016, left the grocery chain Feb. 25. Supervalu VP of Marketing and Consumer Insights Chad Ferguson assumed the role of interim president. Ferguson has been with parent company Supervalu since 2013, and previously spent more than 20 years with Kroger. At Supervalu, Ferguson had filled interim president roles for the company on two other occasions, including at Farm Fresh in 2013 and Shop ‘n Save in 2015.
6. SpartanNash CEO and Chairman Dennis Eidson retired as CEO in May. David M. Staples, who was president and COO, succeeded Eidson as CEO. Staples was appointed to the board effective March 2. Eidson continued in his role as chairman of the board following his retirement as CEO.
SpartanNash also promoted EVP and Chief Legal Officer Kathy Mahoney to president of the company’s MDV military division, based in Norfolk, Virginia, effective May 31. MDV distributes grocery products to U.S. commissaries. Mahoney continues her responsibilities as SpartanNash EVP and chief legal officer.
1. Three Schnucks stores were home to an aisle-roving robot named Tally earlier this year. Schnucks and Simbe Robotics collaborated to test-pilot Tally at three St. Louis metro area stores on July 31. During the six-week pilot, Tally scanned store aisles three times a day to help keep Schnucks stores fully in stock. Tally also could ensure that each product was placed correctly with its appropriate shelf tag. The robot performed its daily storewide scans in the morning, mid-day and evening.
2. Iowa-based Hy-Vee was one of seven retailers selected to take part in a pilot designed to enable Supplemental Nutrition Assistance Program (SNAP) participants to purchase their groceries online. The two-year pilot began in the summer. Hy-Vee is testing the program in Iowa. The U.S. Department of Agriculture calls the pilot a “next critical step” in bringing online purchasing to SNAP recipients.
To keep the pace with technology, the popularity of in-store eateries and Hy-Vee’s continued emphasis on health, the employee-owned retailer restructured several corporate departments in April, adding almost 70 new positions to its corporate staff. More than 50 of the new full-time positions are IT-based.
Those employees work at Hy-Vee’s new Helpful Smiles Technology Innovation Center in Grimes, Iowa. The facility, which opened this year, serves as a creativity center where those in IT and marketing will work together to develop future apps, programs and online content around its customer service and culinary expertise.
3. SpartanNash and Unata teamed up for a new click-and-collect program. Known as Fast Lane, the program allows customers to order groceries online and schedule a convenient time to pick them up. SpartanNash first launched Fast Lane in Grandville, Michigan, in mid-July. Less than a month later, 10 more locations were offering it. Family Fare Supermarkets continue to expand Fast Lane, and as many as 50 stores in Michigan will offer the service by the end of this year.
4. Walmart teamed up with Google to offer items for voice shopping via Google Assistant. Since late September, Walmart has worked with Google to offer hundreds of thousands of items for voice shopping via Google Assistant.
The shrinking format
1. Sendik’s Food Markets continues to expand its Fresh2GO format. It opened one on the campus of Marquette University in Milwaukee on Aug. 22. It also opened two new Fresh2GO markets in Greendale and Hales Corners, Wisconsin. Fresh2GO locations include gas and grocery. The format features a signature deli offering grilled-to-order paninis, a salad bar, a hot bar, an olive bar and other fresh grab-and-go items. They also feature Sendik’s “famous” hand-stacked produce and a variety of fresh products, in addition to meat and bakery departments and gifts from Sendik’s Home.
2. Kroger opened a small-format store called Fresh Eats MKT on May 10 in Blacklick, Ohio. Others are planned for Columbus, New Albany and Marysville. The format may replace some Turkey Hill convenience stores. Fresh Eats MKT features made-to-order foodservice from its Fresh Eats Kitchen and includes mobile/online ordering and indoor/outdoor seating. It also offers fresh produce, meat, a bakery and dairy products as well as bulk nuts, mixes and candy. It also has a drive-thru Kroger pharmacy, a Starbucks and two Coke Freestyle machines.
3. Meijer on May 30 announced that the name of its planned grocery store on the west side of Grand Rapids, Michigan, would be Bridge Street Market. The retailer describes it as a neighborhood market. It will be located near downtown Grand Rapids on the corner of Bridge Street and Seward Avenue. Meijer says Bridge Street Market is the first of its kind in the region and a unique retail model intended to deliver a convenient, fresh neighborhood grocery option for those who live, work and play in the area. The store is expected to open in the early fall of 2018.
Closing up shop, changing hands
1. HyperAMS and Tiger Group said June 26 that they were liquidating the inventory of what once was retailer-owned cooperative Central Grocers Inc., which served as a wholesaler for approximately 400 independent grocery stores, from its headquarters and distribution facility in Joliet, Illinois. The inventory included major brands along with Hispanic products and items under the co-op’s Centrella private label. Associated Wholesale Grocers has taken on many of Central Grocers’ former customers.
2. Strack & Van Til struck out on its own following Central Grocers’ bankruptcy. The new owners are called the Indiana Grocery Group and include members of the Strack family. The Indiana Grocery Group put in a successful bid for 20 stores. The chain had been sold to Central Grocers in 1997.
3. The last six Gordy’s Market stores were sold in December. SpartanNash (previously Nash Finch) sued Chippewa Falls, Wisconsin-based Gordy’s Market in August claiming that the retailer owed more than $86 million. The grocer said it had reached a consensual agreement with SpartanNash to have a receiver help it meet its financial obligations. Gordy’s immediately closed underperforming stores in Richland Center, Spencer and Stanley. At that point, Gordy’s already had closed three stores and planned to sell three more. Among those who have purchased Gordy’s Market stores are Festival Foods, Hansen’s IGA, Family Foods and Great Lakes Foods.
4. Marsh’s Supermarkets filed bankruptcy in May. The Kroger Co.’s Topvalco subsidiary acquired 11 stores, and Fresh Encounter affiliate Generative Growth bought 15 stores. Marsh is owned by Sun Capital Partners. As of mid-October, it was unclear what would happen to the rest of Marsh’s 44 locations.
1. A coalition of national and state merchant trade associations signed a letter late last year that was addressed to leaders of the U.S. Senate and House of Representatives calling for protection of debit interchange or “swipe” fee reforms that were included in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank debit reform measures allowed small businesses for the first time to see and know exactly how much they would be charged for a debit transaction from one of the covered institutions. Previously, the debit card swipe fees had traditionally been set behind closed doors.
In our July issue, we reported on the victory as House Republican leaders dropped language from the Financial Choice Act that would have repealed debit swipe reforms. The National Grocers Association and more than 120 other groups, ranging from the American Beverage Licensees to the Wyoming State Liquor Association—and including every grocers association in the Midwest—rejoiced as it was saved.
2. Associated Food & Petroleum Dealers (AFPD) has a strong voice in Lansing, as member Joe Bellino won his campaign for the Michigan State House in the 17th District. This district covers the northeastern part of Monroe County and three areas of Wayne, Sumpter, Rockwood and Flat Rock. Bellino’s decision to run for office stemmed from frustration with how the state is run, according to AFPD.
3. We promised to get back to Hank Meijer and politics, and here it is, even though this is the first reporting The Shelby Report has done on this story. Meijer has written a political biography called Arthur Vandenberg: The Man in the Middle of the American Century. Vandenberg was a Republican senator and a consensus builder in Washington, D.C. Prior to that he was a newspaper editor and publisher.
In an interview, Meijer told WGVU Public Media, “Today we struggle so much with a society where we can choose our own sources of information and we can choose our own particular clan or tribe that we associate with. And he recognized, both as a newspaper man and then as a politician, that you had to climb out of that comfort zone and interact with others to really get things done for the long-term.”